The people who made the movie wanted E.T. to have a favorite snack. Then they had another idea. They went to the makers of M&Ms candies and said: "We'll use your candy, if you'll help advertise our film when it comes out." M&Ms said no. Reese's Pieces said yes.

Millions of people watched the movie, and many probably learned about the candy for the first time. It was the best advertisement Reese's could have hoped for.

It was also the beginning of what is called "product placement." Companies have worked hard ever since to get their products included in movies, on TV, and now even in video games. Sometimes they pay a movie studio to use their products on-screen. Others agree to advertise the movie in return.

Some products are so popular that they don't need to exchange anything in order to appear in a movie. A product like Coca-Cola, for example, is such a big part of American culture that it only seems natural to see it in movies.

Most movies now include dozens of product placements. Some in the movie business say that using real products makes entertainment seem more real.

But specific products are primarily used for two reasons: (1) to make money for filmmakers, and (2) to get viewers to buy the products.

Product placements have become enormously popular over the past 15 years.

The movie "Wayne's World" (1992) taught viewers about product placement when the main characters stopped in the middle of the film and said it was time for a "product placement moment."

"Ever since then, kids know better than adults," about product placement, says Jay May, president of Feature This!, a product-placement firm in Los Angeles. "The younger generation is very aware of it."

Last year, the movie "Josie and the Pussycats" even incorporated product placement into the plot. At the end of the film, the villain says that product placements will be the future of advertising to kids.

How a movie revived a toy

Apple says that its computers have appeared in more than 1,500 movies and TV shows. Programs with younger audiences like "Friends" and "Buffy the Vampire Slayer" like to use Apples, mostly because they have the image of being fun and casual.

Companies want their products to appear in movies and on TV shows that attract the kind of people most likely to buy their wares.

In 1995, sales of Etch A Sketch and Mr. Potato Head skyrocketed when they appeared in "Toy Story," seen by millions of kids. No product-placement or licensing deals were made for that film. In fact, the Slinky Dog, also featured, had been out of production for years. A new Slinky Dog was quickly rushed into production.

Many film producers decide long before they film a movie that they will use many product placements.

Companies that want their product in a movie often talk with the movie's writers and ask them to make their product an important part of the film.

Other studios make a list of the kinds of products they plan to use in a movie and let companies bid for the right to have their products used.

On its website, Feature This! lists an upcoming film called "I.D.," starring John Cusack. Under a short description of the film it lists "product opportunities." They include: cellphone, luggage, sodas, snack food, and sunglasses.

Manufacturers will sometimes pay a lot to guarantee that their product is used, and not a competitor's. Product placements usually cost between $10,000 and $1 million, though they often average about $50,000. (Carmaker BMW reportedly paid $3 million to get James Bond to switch to one of its cars in the 1996 movie "Golden Eye.")

Some companies will help advertise a movie in exchange for a product placement. Fast food restaurants (you know who they are) may even include a toy based on the film in its kids' meals.

'Verbal placement' is best

Other companies might let cast and crew use their product in exchange for an on-screen appearance. A "craft services" table on many movie sets may have lots of food and beverages. Many of these items  bottled water in particular  will also appear in the film.

Some product placements are more sought after than others. "Verbal placements" are often the most valuable. That is when a character actually says the name of a product.

Linda Swick, president of International Promotions in North Hollywood, Calif., was able to get a character in the NBC TV program "Leap of Faith" to mention Volvo cars  a client of hers  on a recent episode.

The bigger the star who mentions the product, the better. A company will often pay three times as much to have their product referred to by the main character or a famous actor rather than by someone the audience might not recognize.

It's even better when the star handles the product. In the 2000 movie "Charlie's Angels," the three main stars pick up brand-name high-tech objects (Nokia cellphones, Palm Pilots) throughout the film.

These "hands on" placements win the product more exposure. In the viewer's mind, the product is closely associated with the movie star. (That's what advertisers hope, anyway.)

Product placements are most common in comedies. When people watch comedies, they often instinctively search for an object in the scene that is part of a joke. "The sillier the comedy, the more your eyes roam around, looking for jokes," Mr. May says.

Too many 'Godzilla' products

In dramas or thrillers, the movie director is more likely to focus closely on a specific object or person, leaving less space for products.

Product placements don't always benefit movies. Products worked into a script may seem out of place. The 1998 film "Godzilla," according to Ms. Swick, was filled with banners for many products that did not make sense in the scene. When that happens, viewers stop paying attention to the movie.

"Any time a product draws too much attention by looking inappropriate," Swick says, "it's not good for the movie or the product."

Movie directors sometimes ask that product labels be colored over with black marker to avoid drawing attention to them. But movies without recognizable products may seem unrealistic. To avoid legal problems, movie directors used to write ACME or some other generic label on products. Others made certain that labels were turned away from viewers.

These days, product brands can be found just about everywhere  on our clothes, at work, even in school. Many moviemakers say product placements make their movies seem more true to life.

Others say that product placements are little more than commercials, and that they should be restricted  particularly in movies and TV aimed at kids.

"In some ways, product placement is even stronger in kids programming," says Kalle Lasn, editor of Adbusters Media Foundation, a consumer-advocacy group in Vancouver, B.C. "Toys are placed in kids' programming in a way that's more blatant than what's seen with shows for adults."

A high-tech way to give old shows new ads

The VCR was bad enough for advertisers: Viewers could tape their favorite shows and fast-forward through commercials as they viewed the shows later. Advertisers began to search for other ways to publicize their products on TV.

Today's digital video recorders have made it even quicker and easier to skip over commercials at the touch of a button. In fact, as digital video recorders become more popular, some TV experts think companies will give up making commercials altogether. But they won't give up advertising their products on TV. Instead of making commercials that air in between programs, they will pay lots of money to ensure that their products appear on the TV programs themselves.

If people are zapping the commercials and watching the shows, the theory goes, then let's turn the shows themselves into commercials.

Sales of a company's product might go up and down depending on where and when (and with whom) it appears on TV. Clothesmakers in particular might spend substantial sums to guarantee that major characters on the most-watched TV programs wear their fashions.

Last year, NBC broadcast a commercial instructing "Will and Grace" viewers to go to the Polo website to buy a shirt worn by Grace in that evening's episode.

One week later, 3,000 people had bought the shirt. Polo did not pay extra for the ad, most likely because the company is partly owned by NBC.

If people start getting their Internet service through their TV cable, they might in the future be able to click on a character's fashionable shirt during a TV show and immediately find themselves at a fashion designer's website.

Programs that go into syndication (better known as reruns) might offer even more opportunities for product placement than the program did when it originally aired.

PVI Inc., in Princeton, N.J., offers to place a company's products into programs after the episodes have been filmed and aired for the first time.

That way, company executives can see the episode before they ask to let their product appear in it. They can also reach audiences in different regions of the country.

Using digital technology, PVI says it can make sure that viewers in, say, Chicago, see a character drink a can of a brand-name lemon-lime soda, while viewers in Los Angeles watch the same character in the same episode swig a particular brand of cola.

The same show could be broadcast overseas using a foreign soda.

"Imagine seeing a different box of cereal every time Jerry Seinfeld takes one off the shelf," says Cathy Wing, a media-education specialist with the Media Awareness Network in Ottawa, Ont.

All these "opportunities" could backfire if they distract viewers from enjoying a program. "You should not break the rhythm of a TV show or performance," says Jay May, president of Feature This!, a product-placement firm in Los Angeles, Calif. "TV is an art."